Pay Secrecy as a Part of Business Strategies

Running head: PAY SECRECY IS A PART OF BUSINESS STRATEGIES
PAY SECRECY IS A PART OF BUSINESS STRATEGIES
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1PAY SECRECY IS A PART OF BUSINESS STRATEGIES
A policy in the workplace, which pertains to prohibition of pay discussion, is known
as pay secrecy. The purpose of the paper is to discuss about the concept of pay secrecy as a
factor of performance strategy and its implication. The paper tends to argue on the
consequences of the implementation of pay secrecy.
Withholding information regarding pay and compensation structure of an individual
employee from all the other employees in the organization is termed as Pay secrecy. It can
also be understood as management’s decision of prohibiting the disclosure of pay scale and
compensation structure among other employees of the organization. In the year 1935, it was
being indicated by the National Labour Relations that workers have the right to get involved
in the activities, which pertains to the motive of collective bargaining or protection with
mutual aid, which reflects the restriction of the employers for the establishment of the pay
secrecy policies. President Obama signed an order in the year 2014, which promoted the
transparency of salary for implementing equal pay for equal work. The executive order also
ensured the identification and cure of salary discrimination of the women employees.
California Governor Jerry Brown marked the Equal Pay Act of California in the year
2015. It is a law that is aggressive in nature. The employers cannot stop the employees from
discussing their wages or threat them for doing so, under this Act. If an employee remains in
charge of the wage system and has payroll information, then disclosure of such information
without permission would be illegal. Most of the employers still practice the pay secrecy
rules even after the federal and state specific laws have been passed. Many force these rules
rather than stating them in writing that discouragesthe discussion of wages by the employees
thereafter implying to retaliate if they do so. These are illegal actions and are a sign of
discrimination of wages based on several demographic factors (Heydemann and Johnson
2019).

2PAY SECRECY IS A PART OF BUSINESS STRATEGIES
Pay scales are an integral part of performance. Most of the part of the performance
comes in the form of bonus. The goals of the organizations can be attained only through the
performance incentives that actually motivate the employees to perform better. The cognitive
motivational theory however suggests a different perspective. The attention given by the
employees on a particular task depends on a number of factors. The expectancy model
suggests that employees are more committed to those tasks that give them better performance
results. Employee perceives a positivity in those tasks that follows fair procedures and uses
proper information.Most of the firms are following a transparency and are opting for
discussion of paycheck in order to create a fairness and competition in the market. The salary
of one employee might be better than the other for the same position. The less pay
demotivates the employees whereas the high pay motivates the employees. The number of
hours worked, emails, the number of sales made and the attitude of work are all performance
indicators. When the employees find that their co-worker gets paid better for the same job, it
demotivates the employees and vice versa. Companiesshould restructure their incentive
packages vertically and not horizontally: the firms can motivate the employees through
promotions rather than performance pay.In simple terms pay secrecy can occur in different
forms and it depends on what type of information is not being provided. The reason why
companies adopt the pay secrecy policy is to minimize the conflicts that can arise between
the employees (Shaw 2015). The employees however are not only interested in the absolute
pay but they also consider the relative pay as a part of their motivation and attitude in
performing the work. Some firms may not allow the employees to discuss about their
individual salaries but they can discuss about the compensation structure (Scheller 2018).
Again the firm may discuss about the different ingredients of the compensation with the
employees in order to be more transparent (Smit and Montag‐Smit 2018). These
compensation structures and salaries actually motivate the employees and when the
employees discuss about these factors they get an idea about the overall condition prevailing